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Chinese Mutual Fund - Cayman Islands
About Cayman Islands
The Cayman Islands is a popular location for mutual fund development due to its favourable regulatory environment, tax neutrality, and extensive infrastructure of service providers. The Cayman Islands Monetary Authority (CIMA) is in charge of ensuring a stable and efficient regulatory framework for mutual funds. The regulatory structure is intended to safeguard investors while providing fund managers with freedom.
The Cayman Islands is a British Overseas Territory in the Caribbean. Cayman Island map also reveals that the region has 3 islands i.e. Cayman Islands (Grand Cayman, Cayman Brac, and Little Cayman) are located northwest of Jamaica and south of Cuba.
According to the most recent United Nations estimates, the Cayman Islands have a population of 67,933 as of Wednesday, May 17, 2023.
The Cayman Islands’ official language is English. In a language variant known as Cayman Creole, islanders’ accents preserve features passed down from English, Scottish, and Welsh settlers (among others).
The law of the Cayman Islands is a combination of common law and statute, and is based heavily upon English law. Law in the Cayman Islands tends to be a combination of the very old and the very new.
1. Favorable Regulatory Environment
The Cayman Islands has a well-established and recognised mutual fund regulation structure. The Cayman Islands Monetary Authority (CIMA) oversees the financial services industry, which has a comprehensive legal system. The regulatory framework is well-known for its stability, efficiency, and flexibility, making it ideal for mutual fund operations.
2. Tax Neutrality
One of the major benefits of creating a mutual fund in the Cayman Islands is tax neutrality. Mutual funds are not subject to corporate, capital gains, or income taxes in the Cayman Islands. This tax-neutral status can assist optimise investment returns and attract global investors.
3. Investor Satisfaction
The Cayman Islands is widely regarded as a premier financial centre, with a thriving mutual fund business. The jurisdiction has a long history of housing numerous well-established mutual funds, including those managed by respected investment managers. The familiarity and trust investors have in the Cayman Islands as a jurisdiction can help the fund recruit cash and develop its investor base.
4. Flexibility in Fund Structure
The Cayman Islands offers fund structure flexibility, allowing for a wide range of possibilities. Structures available to fund managers include open-ended funds, closed-ended funds, master-feeder structures, and segregated portfolio companies (SPCs). Because of this flexibility, fund managers can adjust the structure to their individual investing strategies and investor preferences.
5. Professional Service Providers
The Cayman Islands boasts a thriving ecosystem of professional and knowledgeable service providers, including law firms, accounting firms, auditing firms, and fund management organisations. These service companies specialise in mutual fund establishment and administration, providing experience and assistance to ensure regulatory compliance and smooth fund operations.
6. Investor Confidentiality
The Cayman Islands has strict privacy regulations that protect mutual fund investors’ confidentiality. The names of stockholders and investors are not made public, protecting privacy and secrecy. This feature may appeal to investors who place a high importance on discretion in their financial dealings.
7. Geographic Advantage
The strategic location of the Cayman Islands in the Caribbean places them close to major financial centres such as the United States and Europe. This geographic advantage simplifies communication, travel, and access to a worldwide investor base.
General
| License: | Mutual Fund |
|---|---|
| Timeframe for Approval: | 3 to 4 months |
| Regulator: | Cayman Islands Monetary Authority |
Company Structure
| Local Director: | At least 2 directors (does not need to be resident and no nationality restrictions) |
|---|---|
| Local Shareholder: | At least 1 shareholder (does not need to be resident and no nationality restrictions) |
| Local Registered Office: | Required |
| Local Staff: | Required |
| Compliance Officer: | Required |
| AML/KYC: | Required |
| Audit: | Required |
| Economic Substance: | Required |
| Corporate Tax Rate: | Not imposed on corporations in the Cayman Islands |
| Currency: | Cayman Islands Dollar (CID) |
| Minimum Paid-up Capital: | No minimum or maximum amount prescribed for authorised, issued or paid up share capital |
| Capital Requirement: | Zero |
| Tax Structure: | No income or capital gains tax |
In order to obtain a license, the following steps will be carried out:
- Gathering documents in agreed form
- Drafting of the fund’s offering memorandum
- Preparation of application forms
- Initiation of the license obtaining process
- Proof of local presence is not required but preferred for CIMA
- Registered Office and Registered Agent
- Fund Administration
- Compliance Support
- Directors and Corporate Governance
- Custody and Prime Brokerage
- Investor Services
- Audit and Tax Services
Documents for company incorporation and fund approval
Required documents from all involved individuals (directors, shareholders and beneficial owners)
- Notarized passport copy;
- Notarized utility bill issued in the last 3 months;
- CV for each individual;
- Two professional reference letters
- Certified academic diploma
- Police report
For a corporate shareholder required documents include
- Articles of Association;
- Registered office address document;
- Register of directors
- Register of UBOs (shareholder register, or incumbency certificate, or share certificates)
- Incorporation of the Cayman Islands offshore corporations
- Arrange for local registered officer and local directors, if required
- Investor offering prospectus and subscription agreements
- Draft corporate bylaws, minutes and owner share issuances
- Establishment of corporate bank account suitable for forex operations
- Establishment of merchant service account for accepting credit and debit cards
- Draft requisite business plan, financial statements and financial projections
- Draft requisite Anti-Money Laundering & Know-Your-Customer policies
- Arrange for requisite surety bond
- Prepare and process application for registration under the Cayman Islands Mutual Fund Law
- Representation before licensing regulatory authority, banks and liquidity providers